What is Super Deduction Tax Relief?

It’s all about companies investing in new qualifying plant machinery assets. If you need new machinery, you will be able to claim the super deduction capital allowance relief, which provides relief at 130% in the year of acquisition!

Your company is able to claim an additional 30% relief in comparison to the annual investment allowance (AIA) which provides relief at 100% or writing down allowances (WDA) which provides relief at a slower rate of 18% or 6%.

Only a couple of months left

Don’t delay, as you only have until 31 March 2023 to claim this super deduction on any qualifying expenditure. If your company is planning any substantial plant and machinery acquisitions, it is in your best interest to purchase these qualifying assets prior to the deadline.

What else do I need to know?

The super deduction is only available on new qualifying plant and machinery assets. For special rate pool assets (integral features) a 50% first year allowance is available.

It may be more beneficial for your company to claim super deduction instead of AIA on main pool assets. However, on special rate assets it may be beneficial to claim AIA instead of the first year allowance.

It’s important to be aware that where expenditure is incurred prior to 1 April 2023 but the company’s chargeable accounting period ends after 1 April 2023, a reduced super deduction is available.

Capital allowances are highly complex and in addition to the above, you should also be aware of the annual £1 million AIA limit, which is shared between a group.

Need to know more?

The Government say: “This super deduction will encourage firms to invest in productivity-enhancing plant and machinery assets that will help them grow, and to make those investments now.” They have also produced a fact sheet.

If your company is planning any substantial capital expenditure our specialist tax team can help with planning your acquisitions as well as maximising the capital allowance claim.

For an initial conversation, give us a call on 01903 234094.